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Economic recession, skilled unemployment and welfare

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  • Chaudhuri, Sarbajit

Abstract

The paper develops a three-sector, specific factor, general equilibrium model with two high-skill sectors and unemployment of skilled labor. One of the two high-skill sectors produces a non-traded commodity whose aggregate demand consists of both domestic demand and an exogenously given foreign demand. The consequences of a decline in the foreign demand for the non-traded good resulting from worldwide economic recession on the skilled and unskilled labor markets in a developing economy have been examined. The analysis finds that the effects on the labor markets crucially hinge on the relative factor intensities of the two high-skill sectors and that through the adoption of appropriate fiscal measures; the country can shield its workforce from the rage of global economic downturn.

Suggested Citation

  • Chaudhuri, Sarbajit, 2011. "Economic recession, skilled unemployment and welfare," Economic Modelling, Elsevier, vol. 28(3), pages 1435-1440, May.
  • Handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:1435-1440
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    References listed on IDEAS

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    1. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "FDI in agricultural land, welfare and unemployment in a developing economy," Research in Economics, Elsevier, vol. 64(4), pages 229-239, December.
    2. Sarbajit Chaudhuri, 2000. "Rural–Urban Migration, the Informal Sector, Urban Unemployment, and Development Policies: A Theoretical Analysis," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 353-364, October.
    3. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "Foreign capital inflow, skilled-unskilled wage inequality and unemployment of unskilled labour in a fair wage model," Economic Modelling, Elsevier, vol. 27(1), pages 477-486, January.
    4. Gupta, Manash Ranjan, 1994. "Foreign capital, income inequality and welfare in a Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 45(2), pages 407-414, December.
    5. Pieter Serneels, 2007. "The Nature of Unemployment among Young Men in Urban Ethiopia," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 170-186, February.
    6. Agell, Jonas & Lundborg, Per, 1995. "Fair Wages in the Open Economy," Economica, London School of Economics and Political Science, vol. 62(247), pages 335-351, August.
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    Citations

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    Cited by:

    1. Sarbajit Chaudhuri & Krishnendu Ghosh Dastidar, 2014. "Corruption, Efficiency Wage and Union Leadership," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 559-576, December.
    2. Cristian Dragos & Simona Laura Dragos, 2012. "Econometric Estimations of the Services and Financial Sector Impact on Economic Growth Variations in Times of Crisis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(Special N), pages 621-634, November.
    3. repec:eee:ecmode:v:64:y:2017:i:c:p:539-552 is not listed on IDEAS
    4. Dwibedi, Jayanta & Chaudhuri, Sarbajit, 2011. "Poverty alleviation programs, FDI-led growth and child labour under agricultural dualism," MPRA Paper 29997, University Library of Munich, Germany.

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